January 21, 2009

The Tribune Company is to announce the buyer of the Chicago Cubs
baseball team this week. The short list is Chicago businessman Tom
Ricketts, Chicago real estate investor Hersch Klaff and New York
private-equity investor Marc Utay, according to a reporter at the Chicago Tribune,
who must have, um, pretty good sources. Hope (or is it a goat) springs
eternal for Cubs fans, now 100 years since a championship.

The only reason I bring this up is that Mark Cuban,
famous hedger of Yahoo! shares after selling his company, owner of the
Dallas Mavericks basketball team, frequent finee by NBA commissioner
David Stern (another $25,000 last week!) explained a couple of weeks
ago on his terrific site blogmaverick.com, why he wasn't a finalist for
the Cubs. Inadvertently, or maybe blatantly, he gives the greatest explanation of today's asset values and what has gone wrong with the U.S. economy.

Crazy like a fox, that Cuban. It's just that without financing, the same identical underlying asset is worth much less!

"I never thought it conceivable that it would be hard to spend a
billion dollars on a sports team. In this case it was. Add me to the
list of people who never want to participate in this type of sales
process again. I tried every trick I knew to try to get them to commit
to me. ... You name the trial close, I went for it. But I couldn't
close them." Like that bigger house down the block you got outbid on.

January 16, 2009

The great unwind of Citigroup's financial supermarket has begun. In the face
of $10 billion in losses in the latest quarter, and with its stock at a 16-year
low, Citi struck a deal on Tuesday to effectively sell control of its Smith
Barney brokerage unit to Morgan Stanley.

A slimmed down Citi is long overdue. The rationale for a financial
supermarket always stuck me as odd. Why would anyone stick all their
bank/brokerage/insurance eggs in one basket?

It wasn't the repeal in 1999 of the Depression-era Glass-Steagall Act that killed Citi. It was bad management.

Citibank, founded as City Bank of New York in 1812, has been beat up before.
Overextended in mostly bad real-estate loans in the downturn of 1990, losses
mounted and the stock got killed, hitting the equivalent of $1 after stock
splits. Wall Street was abuzz, debating if the U.S. government had a "too
big to fail" doctrine. The bank didn't wait around to find out. It cut its
dividend and took a $590 million investment from Saudi Arabia's billionaire
Prince Alwaleed bin Talal.